The end of the licensed football agent?

Published 20 November 2014 By: Nick De Marco QC

Goal being scored

Earlier this year Football’s World governing body, FIFA, published its Regulations on Working with Intermediaries1. The FIFA Regulations signal a dramatic de-regulation of one of the most controversial and lucrative business activities in football: agency.

From the 1 April 2015 the system of licensing football agents will be abandoned, and all existing football agents’ licences will cease to have effect immediately (see, Regulation 11). Instead, FIFA’s Regulations provide:

  • Any natural or legal person (i.e. including a company) can act as an Intermediary and represent football players or clubs in contract or transfer negotiations;
  • National Associations must register Intermediaries involved in transactions (Regulation 3);
  • National Associations must be satisfied the Intermediary has an “impeccable reputation” and not a conflict of interest. However, in order to be so satisfied they just need to have a form signed by the Intermediary certifying that he has not had a criminal record imposed upon him for “financial or violent crime”, he has no relationship with other associations that give him a conflict of interest, and he shall abide by the Regulations and the other various relevant rules (Regulation 4, and annexes 1 and 2);
  • Agency Contracts can be for any period (under current Regulations an agent can only represent a Player for a maximum of 2 years under any one Representation Contract) so long as they state the term of the Agreement (Regulation 5);
  • Payments to Intermediaries must still be disclosed to the relevant association (Regulation 6);
  • FIFA recommends that there be a 3% cap on remuneration paid to Intermediaries (their remuneration not to exceed 3% of the player’s basic gross income) – this is in contrast to the current system where there is no cap but the market rate is often between 5-10% (but can of course be more) (Regulation 7);
  • Intermediaries may not receive any remuneration at all from services provided in relation to a Player who is under the age of 18, but may enter into an agreement with them when under the age of 18, with no minimum age, so long as the player’s legal guardians sign the contract in accordance with applicable national law (Regulations 5 and 7) – under the FA Agents’ Regulations currently in force agents can be remunerated in respect of players aged 17 and over, but cannot enter agreements with players below the age of 16;
  • Similar (but far less detailed) provisions as to Conflicts of Interest that exist in the current system apply (Regulation 8);
  • National Associations will be responsible for imposing any sanctions on parties within their jurisdiction that violate the Regulations (Regulation 9);
  • National Associations are required to implement and enforce the FIFA Regulations, but are entitled to go beyond the “minimum standards” in them (Regulation 1);

Why has FIFA decided to de-regulate football agents? The short answer appears to come down to expediency. Whilst most European national football associations have managed relatively well to regulate the activity of football agents, FIFA has failed to do so, particularly in some parts of the world, such as Latin America. Some in the industry have privately expressed a view that FIFA seems to lack both the resources and the will to rectify this. Instead, they have decided to abandon the licensing system altogether.

Yet the purpose of the licensing system in the first place was, to refer back to FIFA’s own justification for it, “to raise the professional and ethical standards for the occupation of players’ agent in order to protect players, who have a short career.2In England this has largely worked. Despite representing a number of football agents who have, at times, fallen foul of the Regulations, I share the view of most involved in the industry – that the FA’s regulation of football agents has generally worked, and their processes for enforcing them have been mostly fair. The result is that in the home of the richest football league in the world we have a developed, sophisticated profession of licensed football agents used to operating within the rules and regulations. FIFA appears to be throwing all of this out of the window, and opening up the activity of football agency (which shall continue to flourish) to anyone including, no doubt, in the author’s opinion, the most unsavoury characters.

The English FA has yet to decide what to do. On the one hand it has itself grown its own resources to successfully regulate football agents, on the other it feels pressure from FIFA to fall in line with the new Regulations (despite its right to enforce tougher regulation if it so chooses). The FA has been criticised by some of those representing football agents for failing to consult with them before deciding on its own regulations, and despite promising to bring in its own regulations by April 2015, has yet failed to even publish a draft of what it proposes (the last indication given was that it might have a draft ready by January next year, less than 3 months before it comes into force). There are a number of obvious difficulties the FA will have to grapple with:

  • First, the proposed 3% cap is arguably unlawful under domestic and European competition law. If the national associations club together to effectively fix the price agents can sell their services for the courts may intervene to prevent price-fixing. The Association of Football Agents (“AFA”) has already issued a complaint to the European Commission and if the FA attempt to enforce regulation based on the 3% cap before that is resolved they are likely to find they will be subject to legal challenges.
  • Second, the complete abolition of licenses and opening up of the agency activity is, in the author’s opinion, a recipe for unsavoury characters, accountable to and licensed by nobody, to become involved in football transactions. With the public concern about corruption in football this is surely a step backward.
  • Third, this problem may be particularly sensitive with respect to young and vulnerable players. An “intermediary” would now be able to enter a contract with a minor of any age, including school children. Although the intermediary could not be remunerated under the agreement, the agreement could last for a period beyond the minor’s 18th birthday when the player would then pay a percentage of his wages. The spectacle of unlicensed business men hanging around kids’ games to Register children to contracts for lengthy periods is not an attractive one. In addition, disputes involving allegations of breach of contract and restraint of trade are bound to arise more frequently between Intermediaries and players as a result of this.
  • Fourth, the FA has not yet decided whether Intermediaries will be “participants” or not, that is whether the FA has jurisdiction over them. If it does not make them participants, then disputes between agents and clubs or players concerning fees will have to be resolved in the normal courts, instead of by way of FA Rule K arbitration which can (often at least) be a more efficient and confidential route. The FA shall have no real power to sanction or investigate rogue Intermediaries if it has no jurisdiction over them. It will be the football clubs and players with whom the rogue Intermediaries have done business who will end up being penalised by the FA.

Whilst those in football eagerly await the FA draft regulations, AFA and the European Agents federation (EAFA) are already taking steps to develop their own system for regulation of football agents, one that shall hopefully be supported by the leading European football federations, such as the German FA. Such a model of self-regulation is likely to be in accordance with European law (given the decision of the ECJ in Case T-193/02, Piau v Commission of the European Communities in particular) and could help ameliorate some of the most worrying elements of FIFA’s deregulation. Either way, April 2015 is likely to involve a significant change to the landscape of one of the most commercially active and heavily litigated sectors in football.

 

Nick De Marco has represented a number of football agents and agencies in arbitral and disciplinary disputes, and has lectured on the FA Football Agents Regulations. He advises the Association of Football Agents and, along with Lord Pannick QC and Tom Richards of Blackstone Chambers, is involved in AFA’s complaint to the European Commission about the FIFA Regulations.

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Author

Nick De Marco

Nick De Marco QC

Nick is rated a leading silk in Sports Law and is a member of Blackstone Chambers.

He has advised and acted for a number of sports governing bodies, athletes, most Premier League football clubs and many world-class football players in commercial and regulatory disputes.

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